Should you drop your prices?

Nervous business owners will be doing this under the misguided impression that more people will buy from them.  It’s a bit of a ‘knee-jerk’ reaction to try to improve business in uncertain times.  But take a look at what’s been happening in the High Street.  Some stores dropped their prices after poor Christmas sales last year – and they haven’t been able to put them back up to normal since!  Just think what that’s doing to their profit margins.

Dropping prices won’t have the desired effect of increasing your sales either, especially if you’re in a service business (I found that out myself many years ago – the hard way!).  Instead it can:

• give the impression of inferior quality
• send a message of panic and desperation
• mean you have to work harder (or sell more) for less reward
• be very difficult to increase your prices when you want to later on

Occasionally, and with a definite cut-off date, a special promotion will work but don’t be tempted to extend that date or you will damage your credibility and the success of future promotions.

What I’ve seen working well lately is adding value to purchases.  For example, by offering extra bonuses.  These bonuses don’t need to cost you anything but the impression they give is that you’re adding great value with.  But don’t go overboard and pile on too many bonuses – that just devalues both the product or service you’re selling and the bonuses themselves.

If you want more information about special promotions and marketing via the internet, make sure you visit savvymarketers.co.uk and pick up your copy of ‘The Ultimate Small Business Guide to Marketing via the Internet’

Comments

[Jackie Nees]

Louise you are right on with this. Dropping prices is not what needs to happen. I think by keeping your price right where it is tells people, "I'm not afraid of what is going on and I'm here to stay, you should do business with me" It gives people a sense of security.

I do agree thought that offering bonuses is a smart thing to do. It makes people feel that they are getting more value for their money. In some cases I think even spreading out payments is appropriate if it is hard for someone to make the purchase, you can show them that you value their business by accomodating their needs and making it easier for them to buy with you. They are going to remember the business that went the extra mile for them over the one that dropped their prices in a desperate attempt to keep or earn business.